The Chairman, Heirs Holdings Group, Mr. Tony Elumelu has called on the National Insurance Commission, NAICOM to increase the capital base in the insurance industry in order to compete effectively in the dynamic market as well as meet the current market realities.
He made the proposal at the ongoing 2023 National Insurance Conference in Abuja.
Elumelu who is also the Chairman of UBA Group said a minimum capital base of N50 billion for composite insurance operations, N30 billion for general insurance and N20 billion for life insurance will be more ideal, adding that the capital base of insurance brokers needs to be increased to N1 billion.
The Founder of Tony Elumelu Foundation emphasised need to review the division between life and non-life insurance authorizations and licences, stating that regulation should be used to shape behaviour and enforce compliance.
He further urged the National Insurance Commission (NAICOM) to shift its focus from approving advertisements to concentrating on more significant aspects of regulation. He argued that the Commission should allocate its time and resources to more catalytic actions.
Mr. Elumelu highlighted the current capital requirements for life insurance at N8 billion and N10 billion for general insurance.
He noted that with the devaluation of the naira, these capital requirements amount to about $8 million and $10 million for life and general insurance, respectively, in Nigeria, the largest economy in Africa.
“How can an industry intended to ‘insure’ and mitigate the risks associated with the economic growth of a country have such low capital requirements?
“Let me be clear: recapitalisation is not about increasing the barriers to entry into the industry. Gatekeeping is not the objective here.
“However, we must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions while extending its reach.
“That is the only way the industry can scale and expand operations out of Nigeria and into Africa,” he said.
